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Rbs Financial Risk Management

In: Business and Management

Submitted By nikhil9001
Words 306
Pages 2
Case Study
Royal Bank of Scotland

Q - What are the main forms of regulation that apply to banking institutions?
Thee main forms of regulation are as follows: - * The Sarbanes Oxley Act in the US and associated SEC rules * The regulations developed by private standard setters for e.g.: Combined Code in the UK, Australian Principles of Good Governance and Best Practice

Q - Do most banks respond to the regulatory framework in a similar way? Discuss.
All banks do not respond to the regulatory framework in the same way. Nevertheless, a good relationship with their lead regulator is vital to its success. Therefore, most of the banks’ design of internal risk management systems will reflect in terms of the core elements, the risk evaluation process used by the regulator.

Q - What does the «three lines of defence» model involve? * The Business - It’s accountable for the ownership and day-to-day management and control of operational risk. Responsible for implementing processes in compliance with group policies. * Operational Risk – Implementation and maintenance of the operational risk framework, tools and methodologies. * Group Internal Audit – Providing independent assurance on the design, adequacy and defectiveness of group’s system of internal controls.

Q - How are risk exposures measured within RBS? What are the main limitations of the measurement techniques used by the bank?
It’s usually the Group of Directors who set the overall risks appetite and philosophy and they all participate in discussing the strategy, performance and the financial risk management of the organization.
This kind of system brings some disadvantages as the CEOs may dominate decision-making. There might be a high degree of cynicism among the investors about the statements of risk management that appear in the annual reports.

Q - Which are the key risk

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